Stock prices: Europe rallies on debt-crisis optimism

ByAssociated PressJanuary 18, 2011

A bull statue stands in front of the German stock market, building at right, in Frankfurt, Germany, on Dec.7, 2010. The German stock index DAX rallied Jan. 18, 2011, on optimism that the eurozone would find a way to ease the debt crisis.

MILAN, Italy — European stock markets rallied Tuesday on hopes that eurozone nations are planning to strengthen and broaden their measures to fight the debt crisis.

An influential German survey also gave the markets a boost with news that investor confidence has risen sharply amid hopes that global economic growth will remain robust. Greece, meanwhile, passed another bond market test, raising €650 million ($865 million) in a heavily oversubscribed auction.

Still, analyst Ben Potter at IG Markets cautioned that "lingering uncertainty over Eurozone debt could well deliver something of a hangover."

Ministers from the 17 euro nations meeting in Brussels discussed boosting the size and powers of the region's bailout fund. Support for stronger action is growing and the bloc is clearly trying to come up with a more comprehensive solution to its crisis, with a final decision expected over the coming months.

The crisis has already forced Greece and Ireland to implement painful budget cuts in exchange for multibillion dollar bailouts. Harsh remedies prescribed by governments have provoked protests and strikes in Portugal, Greece and elsewhere.

The outlook was good in Germany, however, with the ZEW survey noting positive U.S. data has raised hopes of continued worldwide growth. Its confidence index rose to 15.4 points for January, from 4.3 in December.

Oil futures hovered below $92 a barrel, largely shrugging off higher demand forecasts from OPEC and the IEA, the oil cartel and the energy agency. In currencies, the dollar was up against the euro at €1.3385 and lower than the yen, at 82.5.

Wall Street appeared headed for a muted opening after being closed Monday for a holiday. Dow futures were up 0.3 percent to 11,758 and broader S&P 500 futures were up 0.5 percent at 1,289.59.

The market close in Asia was not as bright. Japan's Nikkei 225 stock average closed up 0.2 percent at 10,518.98. Elpida Memory Inc., Japan's biggest semiconductor maker, rose 1.1 percent after the Nikkei financial daily reported company plans to raise prices of chips used in personal computers.